Farmgate Cannabis Retail In Canada

This year marked the opportunity for federally licensed cannabis cultivators or processors to sell cannabis products on site. With the advent of farmgate cannabis sales, consumers now have the option to go directly to a license holder’s location to purchase cannabis products.

Farmgate cannabis retail is still in its infancy stage. Some common questions we are asked are the following:

• Can any federally licensed producer open a farmgate cannabis retail store? 
• How is farmgate cannabis different from agricultural farmgate? 
• How is farmgate cannabis different from cannabis retail?
• Is this opportunity only available for holders of standard cultivation and processing licenses? 
• Does farmgate cannabis mean that only cannabis products manufactured by the licensed holder are available on-site?

Here are five things you need to know about farmgate cannabis retail.

1. Each province is different when it comes to farmgate cannabis.

Farmgate cannabis sales allows federally licensed holders to sell cannabis products on site. However, this is not within the purview of the federal regulation but within each province’s cannabis retail regulatory framework. Federally licensed cultivators and processors who intend to sell farmgate cannabis must comply with provincial legislation for cannabis retail. This means, a federal licensee must obtain necessary provincial permits or authorizations before farmgate cannabis retail can be carried out. As each province has different regulatory frameworks for cannabis retail, license holders would go through different processes for farmgate sales depending on the province of their site location.

• Ontario is leading the way in farmgate cannabis sales. This year, two licensed holders have received their cannabis retail store authorization to sell cannabis products on site. 
• British Columbia has continuously expressed their intent to launch the farmgate program in 2022. Saskatchewan’s cannabis retail framework allows for farmgate cannabis. However, there are currently no cannabis retail stores at federally licensed production sites. 
• In Alberta, retail stores can be adjacent to production sites but cannot be realized because of restrictive supply chain requirements. Other provinces and territories such as Manitoba, Quebec, Yukon and the Maritimes still have yet to establish their farmgate cannabis sales programs.

2. The middle-man still exists within the supply chain, but consumers can purchase fresher products on-site.

Agricultural farmgate sales is a direct marketing method where farmers sell their produce directly to the consumer with the intent to bypass intermediaries such as wholesalers and retailers. In some models, consumers can visit the farm and pick the produce themselves. In cannabis, while farmgate adopts the concept of direct sales of cannabis products to the consumer from the license holder’s location, the province maintains governance and control over the supply of cannabis products. 

It is important to note that while proper inventory and records must be kept and submitted to the provincial cannabis regulatory body, the license holder can directly transfer the cannabis product from their site to their farmgate store. Prior to farmgate sales programs, cannabis product is shipped and stored at provincial warehouses, which are then shipped to cannabis retail stores. Consumers who come on-site would have access to a fresher product that came directly from the license holder’s as opposed to coming from the provincial warehouse.

The other similarity between farmgate cannabis and small-scale agriculture is the opportunity for the producer and consumer to build a direct relationship and connecting at the site location where the cannabis product is grown and processed. 

3. A farmgate cannabis store operates like a cannabis retail store within a strip mall. 

Farmgate sales is fundamentally a cannabis retail store located at a licensed holder’s production or processing site. For a licensed holder to open farmgate sales, they must go through the same process required by the province to open a cannabis retail store. Having only a federal cannabis license does not automatically authorize farmgate sales.  During operations, the farmgate cannabis retail store must still follow best practices, maintain sanitation and physical security requirements, have full traceability of inventory, and ensure proper record-keeping at all times. A consumer, when visiting a farmgate store, can expect the same level of cleanliness, age and ID requirements, physical store security, and inventory display, as seen in a non-farmgate cannabis retail store.

4. Farmgate cannabis is an opportunity for both standard and micro-license holders.

Currently, it appears that only the larger licensees with standard cultivation and processing licenses can obtain their farmgate sales licenses. However, regulatory requirements do not constrain micro-cultivators and micro-processors to tap into the same opportunity for the retail of their own brand of cannabis products. Farmgate cannabis sales is an especially great opportunity for license holders in rural areas where the closest cannabis retail store can be a considerable distance away. Farmgate sales allow licensees in rural areas to promote locally grown and processed cannabis products available at their site.

5. Cannabis products available at farmgate are not restricted to those produced by the license holder on-site.

Cannabis products sold at farmgate are not exclusive to those produced by the license holder. Similar to cannabis retail stores, ordering and inventory are purchased through the province and delivered to the store. Additional cannabis products to their product portfolio, other than their own, to be offered at the farmgate depends solely on the license holder. 

Farmgate cannabis retail is an opportunity for both the consumer and licensed holder. To the consumer, it offers a more authentic and personalized experience. To the license holder, it is the opportunity to establish brand recognition and directly connect with the consumer.

How we can help you

Cannabis License Experts is your solution to help navigate the regulatory requirements in preparing, reviewing and submitting your farmgate cannabis retail license application. We offer support from day one of starting your farmgate cannabis store, including strategic planning, business plan development, floor plan preparation, license submission, site inspections, Standard Operating Procedures, reporting, and more.